Solana Beach Business tax nears ballot
Voters will make final decision in June
Without the aid of sales-tax revenue from money-making big-box retailers and car dealerships, Solana Beach must look for other ways to increase financial streams that help balance its budget.
“In Solana Beach, we have a policy that we’ll never make land-use decisions based on sales tax,” Deputy Mayor Lesa Heebner said. “It’s sort of an unwritten thing.”
So as the city tries to cope with a 10 percent loss, or more than $1.2 million, in its major funding sources from two years ago, it now turns to its local businesses for some of the difference.
Solana Beach is moving toward approving a measure for the June ballot that would institute a multitiered tax on all area businesses. A city staff report says sales-tax revenue has “plummeted” nearly 20 percent from fiscal year 2007-08, dropping from just over $3 million to less than $2.4 million in that time.
Heebner said the coastal city’s lifestyle comes with a price.
“We’ve made a conscious decision in Solana Beach that we don’t want big-box stores, that we don’t want car lots, that we want the quality of life that we have, and so that’s why we’ve been successful in the past by passing the small fees,” she said, giving the coastal rail-trail maintenance and sewer fees as examples. “Even the business community is embracing the upcoming business tax.”
Solana Beach is one of the few cities in California that does not already levy this kind of tax to pay for services.
Peter House, president of the Highway 101 Village Walk Association, said the business community is not necessarily embracing the tax, but understands it has to help.
“Given the fact that we’re in trouble, the business community steps up,” he said.
At its meeting last week, the City Council discussed tweaking the tax to add a sixth tier to get more revenue out of its highest grossing businesses. After some deliberation and testimony from House, the governing body decided to keep it at five.
Solana Beach currently only requires businesses to pay a $75 licensing fee upon opening, and then $16 for inspection each year after. The new tax would be based on gross receipts, and owners can decide whether to pay an assigned percentage of their income versus a flat fee based on how much they earn.
At its highest, a business earning more than $2.5 million would have to pay either .0004 percent of its income or $1,150. It becomes cheaper to pay the set rate at a little less than $3 million.
“They know they need to pay their fair share,” Heebner said. “I think we should call it the fair-share tax.”
House, who often represents the business community at council meetings, said there are between 1,500 and 2,000 businesses based in Solana Beach.
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